Maximum number depends on many factors.
First of all, what exactly are you trying to monitor?
Have you rejected by pre-screening any candidates to go on your watch list?
Do you have just one watchlist anyway?
To give some pointers and ideas towards your watchlist creation, here are some details about mine:
I have 4 watchlists on my Investors Chronicle portfolio page which I refer to quite regularly (and this also means that big rises and falls get flagged for my attention from watchlist stocks as well as among actual holdings), and no fewer than 13 watchlists on my Trustnet portfolios page. There will necessarily be lots of overlap, because I decide to do comparisons at different times, and don't delete earlier Trustnet ones in case I want to refer back to them, which saves typing in all the holdings again.
My Trustnet watchlists are mainly created as virtual portfolios, with set investments of £xxx on 7th July 2011 (the first "portfolios" having been started on 07/07/2016). This helps me monitor performance over various periods up to 10 years max and 1 month minimum, and compare 'risk' (= volatility) ratings, etc as well.
2 of the 13 Trustnet watchlists are based on actual holdings at the beginning of 2018, one looks for 'consistent growth', one for 'high return on capital employed', one for gold and gold funds, one for medical funds, one for funds like Ruffer, CGT, Personal Assets and similar, one for Warren Buffett-style funds (Fundsmith, Nick Train funds, Keith Ashworth-Lord's Buffettology), one for total return from investment trusts and funds, one for a second selection of ITs and funds, and finally one which compares typical holdings quoted by Tony Peterson v ones I thought I would choose or would have chosen, to see how much merit his holdings had against my preferred list. I have also tried watchlists of ETFs compared with my own selections, to see whether my dislike of ETFs was warranted in the light of actual results (these I admit to having some hindsight bias, and are now deleted).
The IC watchlists are:
a big portmanteau one (list of 121 equities, 1 ETF, 9 funds, + the FTSE 250 index); a potential buy list for if the Dec 2019 election was won by Boris to the extent that Corbyn had no chance for a long time (30 equities, 9 funds, + FTSE 250 index); a newer 2020 buy ideas list (22 equities, 2 ETFs, 3 funds, + FTSE 250); and finally, a portfolio of ideas related to the theme of environment, sustainability and governance, since this seems to be gaining ground as a global theme (5 equities, 4 funds, + FTSE 250).
The Trustnet range tells me that my past lists created of 'maybes' and 'hopefuls' has performed like this during the last year:
One year performance : Best was my shortlist for the April 2018 ISA season (up 46.8%), worst were the two actual portfolios as at Jan 2018 (+ 13.2% and 13.9%)
6 months performance: Best was the Medical Funds ( + 24.6%), worst was one of the actual Jan 2018 portfolios (down 1.4%)
1 month performance : Best 'High ROCE' (+4.4%), worst the shortlist for April 2018 ISA season.
As you can see, results do vary with time!
'Medical funds' were the best performer over these 3 short time periods, and this virtual list was made up of these 3 holdings : Tristel plc, Biotech Growth IT [BIOG], Worldwide Health IT [WWH]. With net income reinvested, the results over 10 years were 711.2%, 529.0% & 455.6% respectively. The 3 were in the same order of performance over 3 yrs and 5 yrs, and over shorter periods the relative performance was more variable. The only loss showing is WWH -1.9% over the last month.
This portfolio is extremely narrow, extremely specialised, and I would not dream of choosing this one in isolation, because the results could vary between brilliant and awful, depending on the timing. Not for widows and orphans!!
My first and biggest list is headed 'ITandFund total return', and is sadly very much a virtual portfolio, because today's total value is apparently £16,867,051.01 !! It has 97 holdings, including some individual equities added for easy comparison with managed blocks of holdings. It's perhaps fair to say that the individual equities were somewhat cherry-picked in the light of earlier past performance figures spotted, so it's probably not right to assume that any fool could get better results themselves than an experienced fund manager!
Over 10 years, the returns (offer to bid prices, income reinvested) would have been:
(Best few):
Ashtead +3210.4%
Games Workshop +3130.3%
Somero Inc + 1826.6%
Rightmove + 1327.7%
RWS + 967.4%
Treatt + 966.4%
Lokn Store + 928.4%
Spirax-Sarco + 813.4%
Trifast + 778.1%
Abcam + 637.1%
Rights & Issues IT + 632.7%
Baillie Gifford Shin Nippon + 625.7%
Legg Mason IF Japan Equity A + 606.9%
Burford Capital + 601.8%
BlackRock Smaller Companies IT + 595.9%
Scottish Mortgage Trust IT +576.5%
Henderson Sm Cos IT +540.7%
BIOG IT + 529%
F W Thorpe + 525.8%
CVS Gp + 482.8%
Hill & Smith + 480.0%
Breedon Gp + 472.2%
WWH IT + 455.6%
Internat Biotech Trust IT + 445.3%
James Halstead + 432.9%
European Opps Trust + 425.5%
JPMorgan Sm Cos IT + 414.6%
......... etc etc
At the bottom end:
JPMorgan Emerging Europe Equity B Acc +28.7%
Ruffer IT [RICA] + 40.8%
India Capital Gwth + 47.4%
Stewart Investors Global Emerging Mkt Leaders A GBP Acc + 82.1%
Capital Gearing Trust + 82.6%
Personal Assets IT + 82.7%
JPMorgan Indian IT + 92.7%
JPMorgan Emerging Mkts B Acc + 1000.3%
Royal Dutch Shell 'B' shares [RDSB] + 104.0%
JOHCM UK Opportunties A Acc + 123.2%
......... etc etc
What the general feel of the results tells me is that:
Despite what people might have thought from a period of post crash crisis for global economies and QE by the $multi-billion barrel, most equities did really well, and there were lots of individual equities that really raced skywards in value during this period. Equally, there are no parts of this portfolio that ever included Carillion, Marks & Spencer, or many other large-cap companies that i did not want to own because of their area of activity or their profitability, or their large pension deficits, and their lack of visible earnings, etc.
Quality pays, and modest holdings in small rising stars added to when they show real signs of stardom can make a very large amount of money.
But they are much easier to spot in hindsight than in advance, otherwise I would be dictating this post to 'one of my many employees' rather than typing it myself!!
A good fund manager is worth it.